Ralph Lauren Beats Profit Estimates, Misses Sales Goal

Ralph Lauren Black Label Pre-Fall 2014 New Arrivals was inspired by rich shades of camel and showstopping leopard prints.

Ralph Lauren Black Label Pre-Fall 2014 New Arrivals was inspired by rich shades of camel and showstopping leopard prints.

New York—Ralph Lauren Corp. today reported it beat profit estimates despite a 10% decline from last year as revenue growth failed to offset higher operating expenses.

The company, whose brands include Polo, American Living and Club Monaco, posted net income of $162 million or $1.80 a share, compared with $181 million or $1.94 a share in the prior-year quarter. Still Ralph Lauren beat analysts’ estimate for $1.76 a share.

Net revenues grew 3.4% or 2.4% in constant currency, to $1.71 billion from $1.65 billion in the same quarter last year. Yet that missed analysts’ average estimate for $1.73 million.

Consolidated comparable-store sales increased 3% or 1% on a constant currency basis.

International Expansion

Our better-than-expected first quarter profitability reflects excellent progress on our strategic initiatives, including double-digit revenue growth for our international and global e-commerce operations,” President/Chief Operating Officer Jacki Nemerov said in a statement.

Wholesale net sales declined 3.7% or 4.1% in constant currency, to $708 million, and retail net sales increased 9.2% or 7.8% in constant currency, to $960 million from the year-ago quarter.

Meanwhile, licensing revenues grew 3.8% or 3.7% in constant currency, to $40 million from last year’s $39 million.

Operating margin contracted 240 basis points to 14.3%, primarily due to higher operating expenses, partially offset by a 30 basis points improvement in gross profit margin to 61% from last year.

Looking ahead, Ralph Lauren Corp. expects consolidated net revenues for the second quarter to increase 4% to 6%. The company also said it continues to project revenue growth of 6% to 8% for the fiscal full year.

Analysts are expecting second quarter revenues to grow 7.9% to $2.07 billion and full-year revenues to grow 7.1% to $7.98 billion.

“Our first quarter results demonstrate that we are making the right strategic decisions and investments to support our long-term growth objectives. Later this month, we’ll mark an important milestone for the Polo brand with the introduction of Polo for women,” Chairman/CEO Ralph Lauren stated.

The company’s expansion includes the opening of a new Polo flagship in New York City and a plan to open a 20,000-square-foot store in Greater China.

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Jeff Prine

Jeff Prine, Editor at Large, Accessories Magazine
Jeff returns as a regular contributor to Accessories magazine. Initially Jeff worked as senior editor at Accessories more than 20 years ago and his love of the industry has followed him until present. Since his tenure here, Jeff has continued to report jewelry, watch and other luxury goods trends as executive editor at Modern Jeweler magazine, fashion director at Lustre, and as contributor on products and trends for consumer and trade publications and websites. In addition to his editorial experience, Jeff also served as an adjunct instructor for accessories merchandising at Fashion Institute of Technology. jeffp@busjour.com